Quest Software Announces Receipt of Superior Proposal to Acquire the Company for $27.50 Per Share

ALISO VIEJO, Calif.--(BUSINESS WIRE)--Jun. 25, 2012--
Quest Software, Inc. (NASDAQ: QSFT) (the “Company” or “Quest”) announced
the receipt of a proposal from a strategic bidder to acquire all of the
outstanding shares of Quest common stock for $27.50 per share in cash.

The Company’s Board of Directors, acting through the special committee
of independent directors established by the Company’s Board of Directors
(the “Special Committee”), determined that the proposal constitutes a
Superior Proposal, as such term is defined in the Agreement and Plan of
Merger dated March 8, 2012, as amended on June 19, 2012 (the “Existing
Merger Agreement”), among Quest and affiliates of Insight Venture
Management, LLC and Vector Capital (together, the “Buyout Group”). In
making its determination, the Special Committee consulted with its
independent financial advisors and outside legal counsel.

The definitive terms and conditions of a merger agreement detailing the
proposal have been fully negotiated, and the agreement is subject only
to execution by the Company. The proposal is not subject to any
financing contingencies. In addition, in the event that the stockholders
who have agreed to roll over their shares in connection with the pending
transaction with the Buyout Group (the “Rollover Stockholders”) do not
support the Superior Proposal, the Company has agreed to (i) grant to
the bidder an option to acquire newly issued shares equal to 19.9% of
the Company’s issued and outstanding shares as of the date of the
agreement and (ii) pay to the bidder a break-up fee of 3.5% of the
transaction value if the proposed merger agreement is terminated under
certain circumstances, or a break-up fee of approximately 2.9% of the
transaction value if the proposed merger agreement is terminated because
the Superior Proposal is not approved by the vote of the Company’s
stockholders. Alternatively, in the event that the Rollover Stockholders
agree to support the Superior Proposal, the Company has agreed to (i)
pay the bidder a break-up fee of 2.5% of the transaction value or
reimburse the bidder’s out-of-pocket expenses up to $5 million if the
proposed merger agreement is terminated because the Superior Proposal is
not approved by a vote of the Company’s stockholders, and (ii) remove
the option described above.

Quest is a party to the Existing Merger Agreement among Quest and the
Buyout Group, pursuant to which the Buyout Group has agreed to acquire
all of the unaffiliated outstanding shares of Quest for $25.75 per share
in cash. In accordance with the Existing Merger Agreement, Quest
provided notice to the Buyout Group on Monday, June 25, 2012 of the
Board’s determination that the proposal from the strategic bidder
constitutes a Superior Proposal.

The Company’s Board of Directors has not changed its recommendation with
respect to the pending transaction with the Buyout Group. Under the
Existing Merger Agreement, the Buyout Group has certain matching rights,
including the right to propose modifications to the terms of the
Existing Merger Agreement and related agreements prior to the expiration
of a minimum three-business-day period. If the proposal continues to
constitute a Superior Proposal after the expiration of such period, the
Company expects to terminate the Existing Merger Agreement and related
agreements and to enter into a binding written definitive agreement in
connection with the Superior Proposal.

About Quest

Established in 1987, Quest (NASDAQ: QSFT) provides simple and innovative
IT management solutions that enable more than 100,000 global customers
to save time and money across physical and virtual environments. Quest
products solve complex IT challenges ranging from database management,
data protection, identity and access management, monitoring, user
workspace management to Windows management. For more information, go to www.quest.com.

Additional Information and Where to Find It

The Company has filed with the Securities and Exchange Commission (the
“SEC”) a preliminary proxy statement and intends to furnish or file
other materials with the SEC in connection with the proposed
transaction. The definitive proxy statement will be sent or given to the
stockholders of the Company and will contain important information about
the proposed transaction and related matters. BEFORE MAKING ANY VOTING
DECISION, QUEST’S STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND
THOSE OTHER MATERIALS CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY AND THE PROPOSED
TRANSACTION. The proxy statement and other relevant materials (when they
become available), and any other documents filed by Quest with the SEC,
may be obtained free of charge at the SEC’s website at www.sec.gov.
In addition, security holders will be able to obtain free copies of the
proxy statement from Quest by contacting Quest’s Investor Relations by
telephone at (949) 754-8000, or by mail at Quest Software, Inc., 5
Polaris Way, Aliso Viejo, California 92656, Attention: Investor
Relations, or by going to Quest’s Investor Relations page on its
corporate web site at www.quest.com.

Participants in the Solicitation

Quest and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from the stockholders of
Quest in connection with the proposed merger. Information regarding the
interests of these directors and executive officers in the transaction
described herein has been included in the preliminary proxy statement
described above and will be included in the definitive proxy statement
to be filed with the SEC. Additional information regarding these
directors and executive officers is included in Quest’s amended Annual
Report on Form 10-K/A, which was filed with the SEC on April 30, 2012.

Forward-Looking Statements

This release may include predictions, estimates and other information
that might be considered forward-looking statements, including, without
limitation, statements relating to the completion of the proposed
transaction. These statements are based on current expectations and
assumptions that are subject to risks and uncertainties. Actual results
could differ materially from those anticipated as a result of various
factors, including: (1) the Company may be unable to obtain stockholder
approval as required for the transaction; (2) conditions to the closing
of the transaction may not be satisfied; (3) the transaction may involve
unexpected costs, liabilities or delays; (4) the business of the Company
may suffer as a result of uncertainty surrounding the transaction; (5)
the outcome of any legal proceedings related to the transaction; (6) the
Company may be adversely affected by other economic, business, and/or
competitive factors; (7) the occurrence of any event, change or other
circumstances that could give rise to the termination of the transaction
agreement; (8) the ability to recognize benefits of the transaction; (9)
risks that the transaction disrupts current plans and operations and the
potential difficulties in employee retention as a result of the
transaction; and (10) other risks to consummation of the transaction,
including the risk that the transaction will not be consummated within
the expected time period or at all. If the transaction is consummated,
our stockholders will cease to have any equity interest in the Company
and will have no right to participate in its earnings and future growth.
Additional factors that may affect the future results of the Company are
set forth in its filings with the SEC, including its Annual Report on
Form 10-K for the year ended December 31, 2011 and Quarterly Report on
Form 10-Q for the quarter ended March 31, 2012, which are available on
the SEC’s website at www.sec.gov.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date thereof. The
Company undertakes no obligation to update forward-looking statements to
reflect events or circumstances after the date thereof.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Quest Software Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.